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Why The Keynesian Chorus Is Cackling Like Chicken Little
Submitted by David Stockman via Contra Corner blog,
This is getting way too stupid. The Keynesian Chorus has launched a full blast trilling campaign, emitting an increasingly shrill cackle of warnings against a Fed rate hike. Yes, 80 months of pumping free money into the canyons of Wall Street is not enough.
Why?
Well, this is hard to type with a straight face, but according to the cackling gaggle of Keynesian Chicken Littles, the Fed has already tightened too much!
Paul Kasriel, the former chief economist at Northern Trust who now writes “The Econtrarian” blog, argues that “in recent months Fed monetary policy has become downright restrictive.”
Would that Kasriel could be dismissed as merely a Wall Street shill, but its seems that he’s taking his cues directly from John Maynard Keynes’ very vicar on earth. That would be Larry Summers, who yesterday blogged an identical bit of tommyrot:
I believe the case against a rate increase has become somewhat more compelling even than it looked two weeks ago…..First, markets have already done the work of tightening. The U.S. stock market is worth $700 billion less than it was 2 weeks ago and credit spreads have widened noticeably. Financial conditions as measured by Goldman Sachs or the Chicago Fed index have tightened in the last 2 weeks by the impact equivalent of more than a 25 BP tightening. So even if resisting inflation required a 25 BP tightening as of two weeks ago, this is no longer the case.
You can’t make this stuff up! And you don’t have to mince any words, either. This whole mantra that free money is actually tight money is the product of a tiny circle of academic scribblers and Wall Street hirelings who have invented what amounts to an alternate vocabulary of economic newspeak.
Exhibit number one is the Goldman Sachs Financial Conditions Index. As shown below, it purportedly has surged sharply toward “tightening” during the last 15 months.
In fact, using this index Professor Summers twists economic logic into a corkscrew. By his lights, today’s deeply negative real interest rates at -1.52% are actually far tighter than 30 years ago when real interest rates were +2.13%!
I am not exaggerating. That’s exactly what the man said:
The figure below makes a crucial point. It shows that even though the federal funds rate is very low (negative one and a half percent after adjusting for inflation, financial conditions are helping the economy less than in previous years when interest rates were much higher.
Here’s the thing, however. Would you actually buy a used car from Goldman Sachs?
It turns out that this purportedly scientific measuring rod is just a goal-seeked data concoction put together by none other than the B-Dud. Back when Bill Dudley was Goldman’s chief economist, he needed a convenient metric to signal whether or not Greenspan was pleasuring the Wall Street gamblers with “moar” money at any given point in time.
So he came up with a four-factor indicator based on interest rates, credit spreads, equity market prices and the value of the US dollar.
That is to say, the Goldman index consists of financial variables that are so powerfully influenced by Fed policy that they comprise the next closest thing to an auto loop. And a perverse one at that.
To wit, when the Fed is heavily pumping monetary juice into Wall Street and the gamblers are in a full throttle “risk on” stampede, what happens to the components of this purportedly scientific index?
Why the dollar weakens, as it is sold short into the offshore and EM carry trades; credit spreads between risk-free treasuries and junk bonds tighten, since its risk-on time and money managers are desperate for yield; equity prices rise because the casino is rocking; and interest rates are pegged at zero because the FOMC has essentially expropriated/nationalized the money market.
But when the resulting financial bubble finally reaches its apogee, as it did in the spring of 2000 and during the fall of 2008, the gamblers eventually succumb to a spat of “risk-off”, causing three of the four indicators to beat a panicked retreat.
Accordingly, credit spreads blow-out, as junk and other risky credits are dumped; the dollar soars, as off-shore markets scramble to cover the immense dollar short; and equity markets fall, as leveraged trading in the casino is unwound.
So wouldn’t you know it. The inevitable collapse of the Fed’s bubble cycle causes the Goldman Sachs Financial Conditions Index to go vertical in the direction of “tightening”!
In a word, the Goldman gamblers have constructed a junk economics index that tells the Fed not to tighten because the arrival a modicum of sanity in the casino is evidence that it has already tightened.

It is not surprising, therefore, that the Fed almost always has its hand on the Easy Button. Indeed, during the last 25 years, it has been cutting or holding money market rates constant at (mostly) ultra low levels 80% of the time.
All of this perpetual easing, of course, is done in the name of filling the Keynesian economic bathtub with that invisible economic ether called “aggregate demand”. But under conditions of peak debt in the household sector and the dynamics of bubble finance in the C-suite, drastic interest rate repression, such as embodied in 80 straight months of ZIRP, does not fuel an outbreak of borrowing and spending in either sector.
In fact, upwards of 90% of households are tapped out and can’t borrow more regardless of the interest rate.
Likewise, the C-suite of corporate American has become so addicted to harvesting stock option gains that virtually any and all incremental borrowings have gone into stock buybacks and other financial engineering maneuvers. That is, into inflating the secondary markets for existing financial assets, not funding an increased call on real plant, equipment, software and other productive assets.
That the Fed’s massive emission of central bank credit never leaves the canyons of Wall Street under a regime of bubble finance is readily evident in the real economic facts. That is, the plain trends in nominal borrowing and spending show a complete absence of credit-fueled stimulus or any elevation of “aggregate demand”.
Thus, even as the Fed has resorted to progressively more extreme money printing sprees with each bubble cycle, the actual growth of the business system has slowed. Since the mid-2008 peak, for example, business sales have expanded at only a 1.1% annualized rate—-a small fraction of the 4-6% annual gains which occurred during the two prior cycle.
The crucial point about the above chart which covers net production in the entirety of the US business economy——-mining, energy, manufacturing, wholesale and retail trade—–is that it is expressed in actual nominal dollars which ring at the cash register.
By contrast, all of the Keynesian jawing about real interest rates, real GDP growth, real consumer borrowing and spending etc. assumes that “inflation” can be measured accurately by the primitive techniques of the Washington statistical mills; and that the whole system of national income and product accounts which is predicated on these “deflators” actually reflects reality.
No it doesn’t. The Keynesian alternate vocabulary of economic newspeak often creates the appearance of growth and gains in the macro-aggregates by the presumptions of theory, not the tabulation of empirics at the cash register.
For example, the GDP accounts provide for steady “real growth” of upwards of $3 trillion of “imputations” that do not even exist, such as spending on rents by owners who live in their own houses; or by increasing the reported numbers for software and other technology spending by up to 10X on the grounds that improved quality and function should be registered in deeply negative “deflators”.
At the end of the day, however, main street households and businesses do not spend “real” or deflated dollars as computed by the Washington statistical mills; they spend the nominal dollars they have earned or saved, taking into account their own subjective views on the rate at which its purchasing power is being eroded by the rising cost of living.
In this regard, “real interest” rates are an unadulterated fiction. Households borrow based on the monthly cost of carry and the capacity of their incomes to support the contractual debt service required by the marketplace. Professor Summers’ hooey that real interest rates are negative but too tight never crosses the mind of any real world borrowers.
What does cross their mind, by contrast, is debt service carry-capacity and the penalty spreads they might face based on their credit histories. In that regard, here is the collective verdict of America’s 115 million households as reflected in their nominal dollars of mortgage, credit card, auto, student and other consumer debt.
To wit, after exploding by 5X between 1987 and 2008, household debt has gone flat as a pancake since the financial crisis, and, in fact, is nearly $400 billion or 3% lower than it was in early 2008.
That’s right. During that very same period, the Fed’s balance sheet exploded from $800 billion to $4.5 trillion or by more than 9X. Yet all that monetary stimulus had no impact whatsoever on household spending and borrowing. Self-evidently, professor Summers negative real interest rates, which are still too tight by his lights, did not induce tapped-out households to borrow and spend up a Keynesian storm.

The same is true of business. The Fed could not have made the nominal carry cost of interest any cheaper over the last 80 months, regardless of how corporate financial executive might compute the “real” interest rate.
Yet after consuming their depreciation allowances on replacement capital, US business did not spend up a storm on productive capital investment as predicated by ZIRP. In fact, net business investment in Q2 2015 at $562 billion was actually lower than it was in the second quarter of the year 2000.

In short, ZIRP has not caused a credit fueled inflation of either the business or household sectors of the main street economy. Its inflationary impact has been exclusively realized in the canyons of Wall Street where is have fueled the third and greatest financial bubble of this century.
Needless to say, its impending crash is unavoidable because that’s what artificial monetary bubbles always do. Unfortunately, if the Fed heeds the advice of the cackling gaggle of Keynesian Chicken Little’s now importuning it, a new short-lived run at the old May 2015 highs is likely to ensue in the casino, thereby insuring that the ultimate reckoning will be all the more disruptive and destructive.
And that baleful eventuality is all because by the lights of the ruling posse of Keynesian pettifoggers, 80 month of free money is still too tight. That unadulterated nonsense is the scariest part of all.
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this generation has grown up with miniscule rates, so they think this is normal. in fact, they more easily swallow the new normal at every turn. but reality will slap them in the face like a rancid dish rag very soon.
God help us all.
Good to see another optimist, and good luck with that, no turning back now, when the supply lines break in earnest in all those western cities it will be far too late and the Fed will be long since kicked to the curb along with the FRN.
this time it's global Weimar hedge accordingly.
goldman says moar juice! spike the punchbowl now or we will look to the sky and have god intervene, ha. oh, that right, the fed is goldman - never mind.
laws of diminishing returns in full force...
inevitable outcome.
weinmar 2016? 17?
the Fed has already tightened too much!
Send lawyers, guns, and money.......dad, get me out of this.
Anyone else curious who the unnamed 'economist' on Al-Quada's hitlist is? My money is on Krugman.
More informative is whose not on the list -- George Soros.
Don't fool yourselves...they have been distributing shares since May and have already instituted short positions in preparation for the event...LIFT OFF! They'll ride this through the 12-24 months it will take to begin QE again and close out their short positions and go MASSIVELY LONG...this is NOT rocket science you know
Show me the money supply the the Fed's balance sheet!
tick tock motherfuckers!!!
.
Having spent some time in chicken houses, the audio imagery in the first paragraph was very evocative. Stockman is a good writer, and must been in a chicken house once or twice himself.
Yes, he does make a pretty good connection. Turkey houses are far worse, got out of that a while back, still have several chicken houses. In my case, I own them outright and the breeder stock (hatchery) as well. Not a sucker like those contract chicken ranchers.
ownership has it's provileges...
same as it ever was...
We can be glad he wasn't able to evoke the *smell * of a chicken house.
Stockman is a good writer. I've been watching/following him for 35 years. He's on it. :)
hairball
I like his writing because I think it's ACCESSIBLE to people who don't read ZH, but still try to understand things beyond the CNBC/talking heads level. I don't think he broke any new ground with me in this article, but if you didn't spend a few years on ZH or other "fringe, tinfoil hat" blogs, this would probably do a good job for you explaining the scary reality of what's going on below the surface.
Regular reader or not, there must be others like me who need more accessible material. Those who acheived only Econ 102 in a cloud of smoke may need tutorial material to hope to even marginally understand some of the other articles.
I don't screw around with the "markets" or "high finance", even in retirement accounts, but I've come to understand that my life will be affected by those who do.
The FED's going to use China selling bonds as an excuse not to raise, claiming they are in effect tightening (un-QE). No rate raise... BTFD
It won't matter. The math of the global debt cycle is what it is, and diminshing returns going exponentially negative.
Start focusing on a return of your capital before it's too late.
This.
Nothing the Fed can do at this point can mitigate the consequences of the epic distortions that they and other CBs have inflicted upon global markets. The can will now refuse to be kicked.
Everyone is skint................accept the 1%
Increasing rates will make the skint...........skinter if they are in debt
I had to stop at Larry Summers describing falling stock prices as tightening. I'm still laughing. What a goofball. So, just so that we all understand: Wall Street sets its own monetary policy when prices fall. That confirms that stimulus is really just stock prices rising. The fox is protecting the chickens, so what if a few birds go missing? The big picture is that the fox needs to get larger!
"Would you actually buy a used car from Goldman Sachs?"
I was at a dinner w/a goldman vp a few wks ago. she was making a (tbf valid) point about risk tolerance, pulled out a quarter & asked who'd be willing to bet her $100 on a coin toss (the point being if you couldn't afford to lose $100 you had no business being at that dinner). when nobody took her up she made the mistake of picking me to ask what I would be willing to bet her so I thought for a second & replied: "ok, I'll go $100 but not w/a goldman supplied quarter - get one from someone else here & I'll go!" she laughed it off (didn't have a lot of choice - rest of room erupted) but point was made...
Good one!
"OK...instead of $100... the loser fucks the winner"...
The piper draws near.
The Free Money Whores Parade is on ! Not enough lamp posts for these traitors.
The DAY-STAR is WATCHING!
THE GUILLOTINES WILL BE ERECTED!
https://www.youtube.com/watch?v=G5cEUtj35Po
Yes, 80 months of pumping free money into the canyons of Wall Street is not enough. Why? Well, this is hard to type with a straight face, but according to the cackling gaggle of Keynesian Chicken Littles, the Fed has already tightened too much!
Money "is" free. It is created by traders "freely" making trading promises and getting them certified. Those certificates are what we call money and circulate as the most valued objects of every simple barter trade. They allow simple barter over time and space.
The certificates are returned and destroyed by those traders delivering as agreed. If they fail (default), the defaulted certificates are recovered from circulation with equal interest collections, thereby guaranteeing zero inflation of the MOE itself.
The operative relation is: INFLATION = DEFAULT - INTEREST = zero
So, if all money is "free", what's the problem?
Money "can't" be pumped. It is "spent" into the economy through promises to do something specific with it (i.e. a trading promise of amount and time), and is returned when that promise is completed.
The problem is that nobody is monitoring defaults. So traders are able to default and hide their trading failures by simply making new promises to pay off their old failed promises. This is called a rollover. Governments do it as a regular practice.
But rollovers are DEFAULTs. They are proof positive that the trader has failed to deliver as promised. Immediately, the amount defaulted must be recovered by an equal interest collection. Future trading promises made by the failing trader are given an interest load on the front end. For example, he may need $100, but he must borrow (and repay) $110 ... the other $10 being the interest load. This covers another deadbeat trader in his class that only delivers $90 on a $100 promise. It's an actuarial problem well known by the insurance industry.
This process implements an immediate negative feedback loop. The more unreliable the trader becomes, the less viable his trading proposals become (he can't repay "and" pay the interest), and he is automatically ostracized from the market.
If we had a properly managed MOE process, we wouldn't be having this "do we have too much free money out there and what happens if we raise interest rates?" discussion. It is nonsense on its face.
And recall that when people are talking about "money" in that context, they're really talking about "currency". We all know what "money" is...and it ain't a piece of paper vouched by an unincarcerated loan shark (or squid)
And recall that when people are talking about "money" in that context, they're really talking about "currency".
People who "talk about money" are clueless ... including the Fed which we engage to manage our MOE.
Money is "a certified trading promise made by a trader". It may be an actual certificate. Or more likely, it is just a record. When we talk of money in circulation, we are really talking of records in circulation ... an actual piece of paper being a minority manifestation by far.
You can buy a house. You certify your promise to make 360 monthly payments and the seller's record is given proof of that promise. Your transaction with the seller is complete. The seller can then turn that proof into boards, labor, food, leisure, or whatever he wants. In so doing, he may turn it into some paper manifestation like a personal check, a cashier's check, a payment to a credit card account, a federal reserve note, etc. It's all the same ... money. Those then circulate as objects of simple barter exchange ... again usually simply as records.
"You", then, also make simple barter exchanges in which you are the recipient of these records. In the end, you have received and returned enough records (certificates) to clear your own record (your promise is delivered).
It's just that simple.
They are cackling because they know the entire strong economy/CBs saved the world meme rests on the continuation of QE and ZIRP forever at ever increasing rates. Take that away and the emperor has no clothes. Keynesian hubris is very powerful and hates to be proven wrong. In reality, if the economy can't float without free money, you didn't fix it.
GUTTING $ 6 Trillion of savers accounts (not incl CDs, mm accounts) of interest for 6 years IS A CRIME for which they should be tried and imprisoned. THEY HAVE DECIMATED SENIORS and those who spent their principal savings.
NOTHING LESS THAN A CRIME vs HUMANITY !
+1 million Sir!
(the guillotine awaits bruh)
https://www.youtube.com/watch?v=G5cEUtj35Po
It's irrelevent whether or not the Fed tightens. The lion's share of the money the Fed lends to banks is used for speculation not loans. These Fed loans will never percolate through the economy, it's free money that goes directly to the top. If the Fed suddenly lends out at 1%, the banks will just have to find investments that yield 1% more or pay the difference for their free poker chips. That's all this is about. Repealing Glass Stiegel was the biggest fiscal mistake of all time. Banks no longer exist to loan, the exist to speculate. The Fed can't control the economy any longer through interest rates because interest rates are effectively decoupled from the underlying economy. Can we really call banks like BAC, GS, JPM banks anymore? Government spending is apportioned in such a manner that increased government spending no longer has a stimulatory effect. The money the gov borrows from the Fed goes to the military and big pharma boondoggles ala Obamacare. None of this spending is stimulatory to the underlying economy which is left to conttract. The kinds of spending which are stimulatory don't serve the people in control. This pattern has been the dominant theme since the great bailouts. Billions in free money for private excesses turned into public liabilities, no mortgage adjustments for distressed underwater mortages.
There's a study passing between the top global multi-nationals right now that says that P2P lending will *eat* their entire lending businesses in the next 10 years. I spoke with one of them and asked "OK let's say I'm a businessman who wants a loan for $500K. His choice is to ask you, and you hand him a stack of paper an inch thick and tell him to come back in 60 days. So our punter wanders to a peer-to-peer lending site, writes in who he is, how much he's borrowing, and why...and 20 minutes later he has his $500K from 500 people lending him $1000 each".
I hope these guys are reading the history of Eastman Kodak. Invented the digital camera, then put it on the shelf because it would cannibalize their silver film business. Formerly a Dow stalwart...now gone.
When the sky really does fall (real soon now), I'll be banned from CNBC and all they'll be saying is "Nobody saw this coming" again.
"Indeed, the above graph surely puts you in mind of the boy who killed his parents and then threw himself on the mercy of the court on the grounds that he was an orphan!"
Made me lol.
Fuck the Fed, Fraud street, and their cackling controlled propaganda lamestream media machine.
Still don't understand why is the author blaming a dead guy. Dead guy who wanted to create aggregate demand through more jobs and main street stimulus. Maybe it was not the best idea. But stimulating Wall Street with free money was never the idea of Mr. Keynes. There's a special list of people who did that.
If a bunch of terrorists are inside a pillbox sniping at you, then you blow up the pillbox.
Neo Keynesians. Neo Cons.
That's not even remotely true. That was the idea of Keynes. And it's obvious you didn't read The General Theory.
Chapter 24
"Thus we might aim in practice at an increase in the volume of capital until it ceases to be scarce, so that the functionless investor will no longer receive a bonus; and at a scheme of direct taxation which allows the intelligence and determination and executive skill of the financier, the entrepreneur et hoc genus omne ... to be harnessed to the service of the community on reasonable terms of reward. "
This dead guy had the intent to flood the market with money so that people would be discouraged from savings and that investors would receive no greater return than the risk of the return of capital.
This text still refers to main street.
"functionless investor"
"the service of the community on reasonable terms of reward."
I tried reading General theory, but it was so dull and quit after 10 pages. Can't read it after Marx and Hayek.
There is one common denominator with these people.
I don't know of any of them making a name for themselves in the 'real' world. They are either 'professors' which doesn't really mean they have a clue or on the government direct payroll or former bank 'economist'.
That is like asking a third generation welfare queen who is 100 pounds over weight and has five kids how to fix the economy. She'll say anything, but the word 'work' is foreign to her. If by chance she mentioned 'work' it is because she heard the term somewhere and it sounds good, but nothing she wants any part of.
"Give us NIRP or the market gets it." -- Kasriel
I don't know what's wrong with you Z'Hedgers ...
Things look great out there, totally awesome ... Sure, we need more QE and NIRP and CASHLESS SOCIETY ... but, wait ... this is for the HOOKERS and the BLOW you SOB's.
(I'm bullish on Hookers and Blow)
https://www.youtube.com/watch?v=G5cEUtj35Po
Correction...
The money does not get dropped into the canyons of Wall Street.
It is siphoned into the SkyNet Matrix in Hoboken
The technical term for that is: "Anal Magic"
They are correct of course. Mises proved that any slowing down of the counterfeiting must bring the malinvestment to bust. People who even speak of deflation today are lost in another dimension. We have hyperinflation, with each cessation in outburst bringing the bust and thus stimulating the counterfeiters to accelarate again. There is ZERO deflation, meaning there is no decrease in the counterfeit supply.
We’re all Keynesian.
You heard your fellow neighbor’s cry like bitches when their houses went underwater.
You heard your fellow neighbors whine on and on about unemployment extensions.
You probably know someone who complains about lacking Social Security COLAs.
Cutting interest rates is not by itself stimulative. This is one basic part of their theory that should be obviously wrong to anyone who thinks about it for a minute.
Who's going to pay for my FAFSA if they quit printing money.
Owner's Equivalent Rent is an economic construct (like the way the Savings Rate drops out of a calculation but isn't a measure of actual savings). It's just a way to meaure the costs of owning a home, not mean;t to be taken literally. FWIW.
Agree that some of the deflators such as Hedonics are just plain nuts. For example a car may cost $X but Bureau of Economic Analysis says it's cheaper than same car 10 years ago because certain features are now standard and not options, or my PC is cheaper because the memory is 100X bigger (even though S/W is 100X bigger too).
At the end of the day the Car is a Car and gets me from A to B and the PC is a tool that I use for a job and I'm not necessarily that much more productive.
I have only one question for the Keynesians: How in the world did we ever survive for so many score of years without interest rates at zero?
Don't let schooling interfere with your education.
Mark Twain
TooooNight Let's Party Like It's NineTeen Thirty Seven...,,
OMG!!!! It's a perfect Elliott Wave!!!! We are fucked!
I don't understand the criticism. There were ZH articles over the last few weeks that pointed out the same dynamic. Markets and overseas banks are causing tightening reactions, which offset the need for tightening Fed policy and actually allow for further loosening. I don't see the conflict.
Raising interest rates will not have that big of an effect in the US. It will make the dollar stronger and hurt those in other nations that have borrowed in dollars. When the dollar is getting close to collapse an interest rate increase should be expected as a desperate measure to forestall even more pain. US corporations are now borrowing in EUROs which means they expect an interest rate increase soon. None of this will help for very long, the collapse will be here soon.
Price discovery, spontaneous order, and the invisible hand are so old school. Besides, there is way too much crony opportunity in the present central distribution of wealth for it to end. And we must get our favorite candidate and party elected next year, so more laxative for the faux markets is indicated.
Damn - Stockman are you a complete dumbass?
First of all Keynes advocated counter-spending into real economy via deficit spending. Deficit spending was to be by way of a Central Bank that monetized government debts.
Do today’s central banks monetize government debts or do they help out their owners, the private banks? If you answered their owners – private banks – you WIN A PRIZE.
Maybe observing the actions of ECB and FED monetizing debt assets held in banks is too much for you?
QE is most emphatically NOT deficit spending. Keynes wanted exogenous money – TREASURY MONEY, also called BASE MONEY, spent into money supply. This money come from outside of the banking system. Treasury could print it up, or through slight-of-hand maneuvering issue new Tbills/bonds to then be monetized by a central bank.
In the great depression, there were idle machines and labor, but not enough money for them to get together and produce. In great depression, run up in private debts had recalled their credit money, and there was nothing left over for transactions. A similar mechanism is at play today in real economy.
You must know this, because during Reagan administration you turned on deficit spending spigot. This river of new KEYNSIAN counter spending then revved up the economy, and went on to become personal savings. Private debts were able to be paid down. You sir are a Keynsian.
So, Stockman, please tell me how private debts are paid down with QE? QE cannot channel appropriately to the real economy. This is not Keynes fault you dumbass.
QE does not enter into real economy. It DOES enter into banking reserve channels, and it does buy TBills out of money supply.
However, the net asset position of real transaction money supply is relatively unchanged as ratio composition of TBills are removed and replaced with cash. Former holders of debt instruments then look for yield in stock market. The reserve loops of banks are also relatively unchanged as their TBills are replaced with cash.
The real laboring transaction economy was actually induced into a new debt cycle with lower interest rates. All this did was hock the future for today by saddling it with more debts. This is again emphatically NOT Keynsian.
Keynes would advocate for PUBLIC debts to then pay off private debts. He would then advocate ignoring public debts and letting them be so many numbers on a dusty ledger.
The FED DOES REBATE usury on TBills/bonds to treasury, or maybe you didn’t know that?
Maybe you don’t know that a sovereign debt to yourself denominated in your own currency is just so much ink on a ledger? Maybe you don’t know that a debt owed to foreigner is a real debt?
Keynes would have advocated for direct spend of debt free directly into the commons, to then pay off private debts. This spend would have also allowed idle factories and labor to come together to then start producing.
Here is a quote from you:
“This is getting way too stupid. The Keynesian Chorus has launched a full blast trilling campaign, emitting an increasingly shrill cackle of warnings against a Fed rate hike.”
You Stockman are the one who is way too stupid. Keynes advocated for counter-spending because he was maybe one of 5 people in the world at that time who understood inherent defects of debt money system. He had a stopgap approach with real treasury counter-spending into proper channels.
It is not Keynes fault that too many people like you seem to not understand how the money system works, and still drag his name through the mud, ascribing to him things that would be anathema to him.
The debt money system has metastasized, where bankers and finance are calling the shots. Central banks are now linked up to serve illuminist money masters, and are subordinate to their owners, the large private banks. Who are the hidden owners of these large TBTF banks?
Keynes counter spending of Treasury type money into productivity channels is the OPPOSITE of empowering private credit money masters via liquidity swaps into reserve channels (QE).
sovereignmoney.eu
Idiot! Yes, we all know what Keynes would do, but in case you haven't heard, he's dead! We're more concerned with what his heirs in the neo-Keynesian movement are doing NOW. Unlike you, we have to live in the real world...
Keynes would cause hyperinflation today without the neo-keynesian Banksters siloing the money.
It tends to make comments about what Keynes would do seem rather bizzare.
Thus we might aim in practice at an increase in the volume of capital until it ceases to be scarce,
Damn again.
During great depression - capital as money, was scarce. There was no money to do transaction, as it had been recalled.
It was completely evident that banks were recalling their notes.
The functionless investor is a rent-seeker, not a producer.
Harnessing to the community implies producers and direct spend into the commons. Taxes are to be collected and then pumped into the commons in a virtuous cycle.
There would be no flooding of money when there is idle machines and labor. There is no inflation in those circumstances.
LIke I said, most people do not understand.
Schacht issued MEFOBILLS which essentially put exogenous money into Germany's economy. From 33-39 they went from being busted out from the inflation to having the most robust economy in the world. Even Schacht, a gold-man, admitted that Keynes was correct.
Even Schacht, a gold-man, admitted that Keynes was accidently correct (as the world's population at the time was only a little over 2 billion people and there were plenty of geographical areas to invade)
Lets cut the head off this chicken and be entertained
let try confiscating all wall street bonuses....kind of like stealing interest for a decade....and ZERO out income tax for everyone making less than $100k....only have a capital gains taxes of 20% plus a 5% financial transaction tax for anything not real! Plus actually arrest the people that broke the financial system and of course Corzine MUST GO TO JAIL!
I guess truth seekers at ZH are not interested in hearing the truth?
What I say is at variance with their precious shibboleths?
My precious, My precious.
If one is holding a position at variance with observable world, and reality, then it shoud be ejected.
Be intellectually honest people - stop being dumbasses like Stockman. Stockman clings to his positions and doesn't have fortitude to adjust in light of new information.
This sort of behavior is pathetic.
MEFOBILLS:
Paul Krugmnan is calling you. Go suck on your sea daddy's dick some more.
We. Just. Need. A. Little. Bit. More. To. Achieve. Escape. Velocity.
That, and, well, ya just gotta BELIEVE it's gonna work:
http://www.bloomberg.com/news/articles/2015-09-10/krugman-says-he-s-real...
Hahahaha! Keynesians are dopes!
Paul Krugmnan is calling you. Go suck on your sea daddy's dick some more.
Krugman is a neo-classical economist who believes banks intermediate money. They don't.
Banks create money at moment of hypothecation as both and asset and liability.
This new bank credit has a debt instrument that grows with usury and recalls its credit at a higher volume than credit emission.
This is a fact, and Krugman not knowing that, even though Steven Keens has proved it emphatically, makes Krugman a dumbass - not a Keynsian.
The heirs of the "world today" are Neo classicals - they are not Keynsians.
Most of the commentors here don't know Jack Shit.
If you guys want to challenge me, then do it without calling names. When you tell me to suck dick or something juvenile like that, you have already lost.
It means you have nothing of substance to say, and you probably are full of ignorance and haven't learned how things work.
It is ok to be ignorant, but dont' be an asshole.
I'm telling it to you straight, and not lying to you like Stockman.
There is so much hypnotism amongst sheeple, when you try to de-hypnotize them, they start bleeting.
No wonder Jews would observe their banker balance sheets, and think about how stupid the Goyim are.
Direct spending Keynes style would not cause inflation.
I've already pointed out that when you have idle machines and manpower, but lack of money, then adding new money is the corrective.
This money needs to be of the right type, and to channel properly.
Currently the world has overcapacity and labor is idle. Money is actually draining out of the lower loop of producers.
QE is a helicopter drop into finance and banks. It is not aimed at the real economy.
Keynes totally would have understood the naunces of this "channeling" and flow dynamic.
Don't cast pearls before swine, lest they be trampled underfoot.
I'm not aiming at the many who are not ready to understand, but there are a few who can be reached.
Direct spending Keynes style would not cause inflation.
Direct spending "any" style does not cause inflation.
Inflation is caused by defaulting on a trading promise and not reclaiming the certificates (money defaulted) through immediate like interest collections.
The operative relation is: INFLATION = DEFAULT - INTEREST
In any properly managed MOE process, INFLATION = zero.
We have never seen a properly managed MOE process.
Our current MOE process manager, the Fed, thinks 2% is the right value for inflation ... and has delivered 4% over the last 100 years. That little leak in the market place's gas tank makes a 1913 dollar trade for 4 cents worth of stuff today.
Pretty bad performance I would say. Fire the Fed I would say.
Even Schacht, a gold-man, admitted that Keynes was accidently correct (as the world's population at the time was only a little over 2 billion people and there were plenty of geographical areas to invade
________________
Schacht was totally against Hitlers "re-inflation" of 1938.
He saw that too much money was going to enter the economy; and of course Hitler wanted to make war.
Don't blame Schacht. He wanted to pay off all of the debts, and even worked out a way to pay off the Zionists. Of course Schacht was rebuffed, as the Zionist plan was Zion/Israel.
Again, you guys can keep on ankle biting.
Schacht actually got FIRED for trying to stop the SECOND inflation.
What passes for schooling these days? Oh that's right, school is mostly a hypnosis factory.
ZH sheeple, just plain don't know things, and I'm sure it is painful for somebody like me to rub you nose in it.
But, please - pick up a book or two and start educating yourself outside of the school system.
Shacht's book, the magic of money would be a good place to start.
Let me remind all of the downvoters again.
Stockman is a Keynsian.
Supply siders under Reagan DEFICIT SPENT OUT OF TREASURY.
This pure Keynsianism. There could not be a more pure case of Keynsian action than deficit spending.
Stockman is a Keynsian.
That Keynes name has gone through some sort of metamorphosis to then make a false case, is hypnosis in action.
Downvote the truth, and you are a dumbass. You are downvoting because reality doesn't comport with your false worldview.
Wake up.
I'm not a slavish Keynsian, i am just against people lying about his intentions.
Lying and false narratives are the action of a parasite.
Parasites intentions are to change the brain function of a host society so they can take rents. Virtually all those who aim their crooked finger at Keynes are rent seekers.
sovereignmoney is NOT FIAT DEBT MONEY.
It is law money.
But, then again a more advanced topic like sovereignmoney is way beyond ankle biters still at a high school level and full of false ideas.
Keynes wanted main street labor to have their reward. It should be abundantly clear to any observer that finance capital is trying to take over. In Keynes time, the exact same mechanics were in play. Private debts had built up due to 20's leveraging in stock market, and today it was housing bubble.
Debt instruments were not written down, and Creditors had priority over debtors. This despite the fact that debt instruments grow with usury, and outside of nature.
Keynes attempted to patch that framework. Don't blame him for subsequent world history, especially now that his name is used for all kinds of parasite attacks.
The real fix is to go beyond Keynsianism. Patches won't work anymore, especially with labor being displaced with automation.
sovereignmoney.eu